The “New Eskom” is ready to roll as the utility has appointed the board of directors of the National Transmission Company of South Africa (NTCSA), a key milestone in the power utility’s legal separation into three entities.
The Department of Public Enterprises (DPE) has been promising South Africans for nearly a year that the “new Eskom” – under a new holding company dubbed NewCo – is around the corner.
The DPE told Parliament in August last year that it is making good progress unbundling Eskom into three separate companies – alongside a new holding company to oversee them.
Under the proposed structure of the new Eskom, a holding company called NewCo will operate with three subsidiaries that function independently –
- Generation: Eskom Holdings Generation (current Eskom)
- Transmission: National Transmission Company of South Africa (NTCSA)
- Distribution: National Electricity Distribution Company of South Africa (NEDCSA)
The most progress has been made in establishing the NTCSA as the legal separation of the transmission company into a subsidiary is now at an advanced stage.
The NTCSA was incorporated in 2021, and the necessary licence applications to energy regulator Nersa have been made.
In July 2023, Nersa approved the licence to operate the transmission system within the boundaries of South Africa. However, this excluded the trading and import and export applications.
It is important to note that this is only occurring 23 years after the process of creating an independent transmission company began.
Professor Mark Swilling, who has been appointed to the board of the NTCSA, told Newzroom Afrika that the company is “ready to roll and is an urgent priority for the country if it wants to end load-shedding”.
He said that a lot of work has already been done to set up the unbundling of Eskom into three separate divisions thanks, in part, to former Eskom CEO Andre de Ruyter.
“One of the priorities of Andre de Ruyter when he was CEO was to implement the divisionalisation of Eskom into three divisions,” Swilling explained.
He said the company’s balance sheet has been configured, and the assets which will be transferred to it from Eskom have been identified.
However, there is still no clarity on how Eskom’s over R400 billion debt pile will be split between the entities.
One of the main reasons for creating a separate transmission company is that Eskom simply does not have a strong enough balance sheet to invest in maintaining and upgrading the country’s grid.
This responsibility will be passed on to the NTCSA, which will buy electricity from suppliers, including Eskom and private companies, and then sell it to municipalities and the new distribution company.
Swilling said the company will sell the electricity with an additional fee to cover the grid’s maintenance and upgrades.
He estimated that the company would need hundreds of billions of rands from the government and private investors to upgrade the grid.
South Africa will need to build over 1,500 km of transmission lines a year for the next decade to ensure increased electricity supply from renewable projects can be added to the grid.
Currently, the country only manufactures 400 km of transmission lines and has never produced more than 1,200 km in a single year.
Upgrading the country’s grid is set to be the largest infrastructure project in the country’s history.